Memorandum
DATE November 30, 2018 CITY OF DALLAS
TO Honorable Mayor and Members of the City Council
SUBJECT
“Our Product is Service” Empathy | Ethics | Excellence | Equity
City of Dallas Fleet Management Study
On December 5, Donzell Gipson, Interim Director of Equipment and Fleet Management, will brief the City Council on the City of Dallas Fleet Management Study conducted by the firm Alvarez and Marsal. The briefing is attached for your review; it will provide an overview of the consultant’s findings and recommendations including a status update on the implementation of process improvements.
The complete fleet management study can be found at the following link:
https://dallascityhall.com/departments/budget/financialtransparency/DCH%20Documents/FMS.p df
If you have any questions on concerns, please contact Donzell Gipson at 214-671-5131 or via email.
M. Elizabeth ReichChief Financial Officer
c: T.C. Broadnax, City ManagerChris Caso, City Attorney (I)Carol A. Smith, City Auditor (I)Bilierae Johnson, City SecretaryPreston Robinson, Administrative JudgeKimberly Bizor Tolbert, Chief of Staff to the City Manager
Jon Fortune, Assistant City Manager Joey Zapata, Assistant City Manager Majed A. Al-Ghafry, Assistant City Manager Nadia Chandler Hardy, Assistant City Manager and Chief Resilience Officer Directors and Assistant Directors
[Attachment]
City Council Executive SummaryDecember 5, 2018
City of Dallas
Fleet Management Study
1
The Fleet Study, conducted from May to July 2017, reviewed five key areas: Cost of Service,
Utilization, Replacement Criteria, Organizational Assessment, and Right-sizing.• This report contains observations and recommendations made by Alvarez & Marsal (A&M) for the City of Dallas (City) 2018 Fleet
Management Study (Fleet Study). The Fleet Study included five categories of review including:
• The objective of the Fleet Study was to assess the operational efficiency of the City’s fleet management and operations in
Equipment & Fleet Management (EFM) and other Departments that own and/or maintain vehicles, including:
EXECUTIVE SUMMARY - PROJECT OVERVIEW
Aviation(AVI)
Fire & Rescue (DFR)
Parks & Recreation
(PKR)Police (DPD)
Public Works (PBW)
Sanitation (SAN)
Storm Water Management
(DWU)Water Utilities
(DWU)
Utilization Study
Replacement Criteria
Cost of Service
Fleet Right-sizing
Organization Structure
Fleet StudyComponents
Study on fleet utilization, including maintenance and managing surplus assets
Review of additional wear and tear from cars that run while sitting idle (i.e., police or bucket trucks)
Assess accuracy of rates, including benchmarking with comparable municipal/government fleets
Right-size the fleet based on the utilization study and
replacement criteria
Assessment of theorganizational structure
and its effectiveness
2
Observations developed through benchmarking research, data analysis and interviews with department leadership and staff, informed A&M’s recommendations for efficiency initiatives.
• The City of Dallas is within benchmark ranges for age, mileage, maintenance, and utilization. • Dallas’ average vehicle age is 8.6 years, compared to a nationwide average of 7.9 and a Federal civilian average of 9.4.
• Average annual mileage of 9,088, is in line with the nationwide average of 9,338 and Federal civilian average of 10,176.• Average annual maintenance cost is $8,903/vehicle, compared to $8,616 nationwide and $9,113 for Federal civilian.• With 47 vehicle/mechanic (actual headcount) in EFM, slightly higher than benchmarks of 55 – 60 vehicles/mechanic.• About 32 percent of total fleet is driven less than 5,000 miles per year, compared to 37% for the best in class benchmark.
• The City is challenged by high vehicle downtime, low preventative maintenance compliance, and the need for improved workflow.
• Departments experience high vehicle downtime which impacts their ability to operate effectively• Data quality issues prevent robust analysis and limit the City’s ability to produce accurate reporting to support decision making• Vendor selection and management is not aligned to drive ongoing parts fulfillment and outsourcing of repair services• Maintenance facility infrastructure and processes lead to inefficient workflow which constrains operations• Inconsistent administration of vehicle replacement drives high late-stage maintenance costs and reduces revenue potential when
vehicles are surplused.
• There are several solutions proposed to improve operations.• Improve data quality through regular reporting and enhanced coordination between the Departments and EFM.• Streamline maintenance facility workflow, through expanding dedicated bays and vehicle maintenance scheduling.• Enhance communication between EFM and customer departments to ensure mechanics repair vehicles effectively and
department staff retrieve completed vehicles from maintenance facilities in a timely manner.• Establish a permanent Fleet Oversight Committee for input on vehicle acquisition, replacement criteria, and fleet right-sizing.• Consider consolidating fleet management operations within EFM to streamline maintenance and administrative processes.
EXECUTIVE SUMMARY - PROJECT OVERVIEW
Note: M5 is the fleet management software utilized by EFM to track and manage citywide vehicles and equipment.
REPLACEMENT CRITERIA – REPLACEMENT UNDER CURRENT STANDARDS
In 2019, 1,911 vehicles will be eligible for replacement using the current criteria, with a total cost of $142.0 million. The City faces over $300 million in replacement over the next five years.
3
Given aging of the fleet, replacing all
eligible vehicles would cost the City over
$300 million through 2024.
NOTE: The projection reflects constant dollar projects without inflation or additional growth estimated included.
REPLACEMENT CRITERIA – REPLACEMENT UNDER CURRENT STANDARDS
Of the $303.8 million required to replace all eligible vehicles under the current criteria, over $80 million is driven by DFD, with another $120 million driven by SAN and DWU, combined.
4
Department 2019 2020 2021 2022 2023 2024 Total
AVI 1,205,398 906,580 377,035 613,720 149,580 216,014 3,468,326
DWU 22,760,316 11,973,917 7,284,957 2,936,976 2,794,734 5,271,307 53,022,209
DWU - Storm Water 5,407,424 3,185,694 2,612,421 203,584 512,126 555,552 12,476,801
SAN 25,473,132 7,713,672 10,259,681 3,050,779 3,117,745 3,600,500 53,215,510
Total Enterprise Fund 54,846,270 23,779,864 20,534,094 6,805,059 6,574,186 9,643,373 122,182,847
DFD - EFM Maintained 756,836 265,924 251,399 375,052 108,359 172,441 1,930,010
DFD - DFD Maintained 43,563,852 713,825 16,005,440 3,563,227 8,975,617 13,660,733 86,482,693
DPD 14,060,457 1,485,292 1,755,134 714,016 656,756 733,968 19,405,623
EFM 5,033,849 1,641,547 920,119 549,877 349,095 601,555 9,096,042
PBW 13,463,416 11,447,052 3,553,192 1,094,368 953,508 1,387,654 31,899,189
PKR 6,745,356 7,089,815 2,505,907 1,462,195 689,515 604,466 19,097,253
All Other 3,518,157 4,350,926 1,889,764 2,121,267 528,918 1,261,820 13,670,852
Total General Fund 87,141,921 26,994,379 26,880,955 9,880,002 12,261,769 18,422,637 181,581,663
Total 141,988,191 50,774,244 47,415,050 16,685,061 18,835,954 28,066,010 303,764,510
Annual Cost for Replacement Eligible Vehicles
General Fund
Enterprise Fund
NOTE: The projection reflects constant dollar projects without inflation or additional growth estimated included.
FLEET MANAGEMENT WORKLOAD – TOTAL LABOR HOURS BY DEPARTMENT
While SAN has the sixth highest number of vehicles, closed work orders represent the highest total labor hours and hours per vehicle. This is likely driven by vehicle complexity.
5
AVI, 1%DFD, 1%
DPD, 22%
DWU, 11%
PBW, 7%PKR, 4%
SAN, 42%
SWM, 3%
All Other, 11%
-
10,000
20,000
30,000
40,000
50,000
60,000
70,000
- 500 1,000 1,500 2,000 2,500
Tota
l Wor
k O
rder
Lab
or H
ours
Number of Department Vehicles
Comparison of Number of Vehicles to Total Labor Hours(including percent of total labor hours)
AVI DFD DPD DWU PBW PKR SAN SWM All Other Total
Total Vehicles 130 118 2,171 1,434 682 375 734 261 888 6,793
Percentage of Vehicles 1.9% 1.7% 32.0% 21.1% 10.0% 5.5% 10.8% 3.8% 13.1% 100.0%
Total Labor Hours 861 652 33,285 16,196 10,723 6,608 63,864 3,980 16,270 152,437
Percentage of Labor Hours 0.6% 0.4% 21.8% 10.6% 7.0% 4.3% 41.9% 2.6% 10.7% 100.0%
Labor Hours per Vehicle 6.6 5.5 15.3 11.3 15.7 17.6 87.0 15.2 18.3 22.4
NOTE: DFD includes only vehicles managed by EFM
EXECUTIVE SUMMARY – DOWNSTREAM CONSEQUENCES
A&M’s recommendations are designed to address challenges across the vehicle lifecycle that
lead to financial and operational inefficiencies and drive higher overall maintenance costs.
6
Focus on purchase price rather than back-end maintenance cost during procurement limits savings potential
Layout of bays and need for workflow improvements at maintenance facilities limits productivity-- At the Southeast maintenance facility,
the one of the bays was dug out to
accommodate larger vehicles
Low PM compliance results in higher long-term repair costs
Higher vehicle downtime leads to the need for a higher number of vehicles, higher maintenance, and higher replacement costs
-- High downtime causes double shifts in
Sanitation and higher overtime
Ineffective vendor management leads to long wait times for parts and commercial labor
Delayed sale of vehicles decreases revenue opportunity and increases maintenance cost
Recommendations1. Follow TCO
Procurement Approach2. Make Shop Workflow
Improvements3. Ensure PM
Compliance4. Data Quality5. Technology Updates6. Follow Underutilized
Vehicle Process7. Right-size Fleet8. Increase Vehicle Motor
Pool
Vehicle Age
Vehi
cle
Mai
nten
ance
Cos
t
2
5
1
6
8
3
7
2
6
1
5
8
3
7
Lack of automated and formalized scheduling for vehicle delivery leads to periods of overload for shops
4
4 Poor data quality causes in limited insights into management decisions
7
A&M estimated One-Time Investment of $2 million to 3 million to generate Annual Impact of $9 million to $12 million.**
Est. One-Time Investment Est. Annual Impact**
(Dollars) (Dollars)
Low High Low High
Follow TCO Procurement Approach $ 160,000 $260,000 $ 175,000 $ 350,000
Make Shop Workflow Improvements 850,000 1,120,000 520,000 1,040,000
Ensure PM Compliance 100,000 150,000 290,000 510,000
Data Quality Improvements 150,000 230,000 - -
Technology Updates / Transformation 230,000 310,000 160,000 210,000
Follow Underutilized Vehicle Process 60,000 90,000 3,660,000 4,870,000
Right-size Fleet 140,000 240,000 2,100,000 2,790,000
Increase Vehicle Motor Pool 50,000 70,000 2,360,000 3,140,000
Total $ 1,740,000 $ 2,470,000 $ 9,265,000 $ 12,910,000
Cost Savings - General Fund 910,385 1,550,125
Cost Savings - Enterprise Funds 666,023 1,134,047
Cost Avoidance - General Fund 3,767,441 5,010,696
Cost Avoidance - Enterprise Funds 3,921,151 5,215,131
EXECUTIVE SUMMARY – ESTIMATED INVESTMENT AND IMPACT
2
4
1
5
8
3
6
**Note: Investment and savings ranges shown above reflect estimates of impacts of A&M recommendations.
7
EXECUTIVE SUMMARY – IMPLEMENTATION PLAN
8
The eight key improvement areas require a 24+ month implementation plan
Yr Short Term Medium Term Long TermWork Step Mo 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12
FOLLOW TCO PROCUREMENT
APPROACH
MAKE SHOP WORKFLOW
IMPROVEMENTS
Make Scheduling Improvements
Revamp Intake / Outtake Process
Change Workorder Management
ENSURE PREVENTATIVE
MAINTENANCE COMPLIANCE
DATA QUALITY IMPROVEMENTS
TECHNOLOGY UPDATES /
TRANSFORMATION
Billing, Customer Transparency
Performance Reporting Enhancements
Long Term System Enhancements
FOLLOW UNDERUTILIZED VEHICLE
PROCESS
RIGHT-SIZE THE FLEET
INCREASE VEHICLE MOTOR POOL
2
4
1
6
8
3
7
5
EXECUTIVE SUMMARY – KEY ACTION ITEMS
9
Key next steps the City must take to improve fleet management fall into five categories –Establish PMO and Governance Structure, Organizational Changes, Data and Technology,
Shop Workflow Improvements, and Agency Communications
✓Establish Project Management Office✓Establish Fleet Advisory Board✓Establish Risk Management and Procurement Working Groups
Establish PMO & Governance
✓Conduct staffing and pay scale assessments✓Hire Service Advisors, Service Technicians, and a Data Quality Analyst ✓Conduct Total Cost of Ownership strategic sourcing exercise to improve pricing and vendor management
Organizational Changes
✓Conduct an M5 system assessment to enhance system use and capabilities✓Require tracking of all assets in M5 to improve data integrity✓Activate key M5 modules to enhance capabilities and improve coordination with other systems
Data & Technology
✓Enhance shop layout and workflow to reduce downtime and increase vehicle availability✓Restructure work order management and establish quality control function✓Refresh equipment and infrastructure to drive more efficient vehicle processing and repair
Shop Workflow Improvements
✓Simplify and automate the billing procedures for increased transparency and customer service✓Incentivize PM compliance and proper user maintenance reduce non-target repair costs✓Engage departments in regular reporting and analysis of fleet management data
Department Communication
EXECUTIVE SUMMARY – MAINTAINING THE MOMENTUM
10
The City should engage in four rapid assessments to continue the process of transforming fleet management, and make informed decisions on how to proceed.
Focus Area Purpose Timeframe
Procurement / Strategic Sourcing
Evaluate pain points and develop the Citywide requirements analysis to drive procurement for fleet operations
60 days
Billing / Transparency
Revise the City’s billing process and integrate the
process with M5 to increase transparency and accuracy of billing based on services received by each department.
90 days
Right-sizing Develop utilization thresholds for each vehicle category and individually review each vehicle that falls below the threshold.
180 days
Mechanic Pay / Compensation
Evaluate the current mechanic compensation structure against the market to ensure that wages and other benefits are competitive and allow the City to attract and retain the best talent.
30 days
© Copyright 2015. Alvarez & Marsal Holdings, LLC. All rights reserved. ALVAREZ & MARSAL®, ® and A&M® are trademarks of Alvarez & Marsal Holdings, LLC.
City of Dallas Fleet Management StudyCity Council BriefingDecember 5, 2018
Donzell Gipson, Interim DirectorEquipment and Fleet ManagementCity of Dallas
Eric Kuhns, Assistant DirectorEquipment and Fleet ManagementCity of Dallas
Purpose/Presentation Overview
• Address consultant recommendations from the Fleet Efficiency Study
• Provide overview and status update on process improvements for Fleet Services
• Upcoming Agenda Items
• Next Steps
14
Government Performance and Financial Management
• How little fleet governance we had and what that has cost/caused
• The consultant’s approach was an efficient way to align data across departments
• The City did not have an existing enterprise view or sustainable fleet strategy
15
Government Performance and Financial Management
What We Learned From the Study
Process Improvements• Organizational Assessment
• Follow Total Cost of Ownership (TCO) Approach
• Make Shop Workflow Improvements
• Utilization, Right Sizing, and Motor Pool
• Technology and Data Quality
16Government Performance and Financial Management
16
17
Government Performance and Financial Management
Organizational AssessmentConsultant Observations Completed In-Progress Next Steps
Hiring1. Develop “Temp” to “Hire” Program √2. 15+ hired and assigned to work at various City
service centers √
Training3. Modernize Training Program by increasing hands
on instruction and utilizing free training opportunities from existing vendors
√
Employee Compensation
4. Address tool/boot allowance and certification pay √5. Engage Human Resources in the City-wide
Compensation Study√
18
Government Performance and Financial Management
Follow TCO Procurement ApproachConsultant Recommendation Completed In-Progress Next Steps
Fleet Governance1. Establish a Fleet Advisory Board to establish standards √2. Ensure (PM) periodic maintenance compliance √3. Centralize decision making on fleet purchases √
Vehicle Procurement4. Evaluate the total cost of ownership versus short term
initial purchase or operational reliance on rental equipment
√
5. Determine the most cost effective funding mechanism for fleet purchases
√
Enhance Outsource Contracting Options6. Work with Office of Procurement Services for better
specifications and timely execution of contracts√
19
Government Performance and Financial Management
Make Workshop Flow ImprovementsConsultant Recommendation Completed In-Progress Next Steps
Scheduling Improvements1. Staff realignment by shift and service center √2. Add 3rd shift at the NW Service Center for
Sanitation Services Vehicle maintenance√
Shop Infrastructure/Equipment3. Purchase new shop equipment to increase safety,
productivity and diagnostic capabilities√
Revamp Intake/Outtake Process4. Hire (6) Service Advisors to engage customers and
perform better quality control√
Change Workorder Management5. Maintenance Triage to better address customer
needs and improve turnaround time√
20
Government Performance and Financial Management
Underutilization, Right Sizing & Motor PoolConsultant Recommendation Completed In-Progress Next Steps
Underutilization1. Identify potential surplus vehicles √2. Validate mileage, use, and hours in operation of
vehicles with low annual mileage as criteria for low utilization
√
Right Sizing3. Identify options to share vehicles √4. Determine requirements based on operational
needs√
5. Develop business rules to earn authorizations to validate requirements for fleet purchases or retention of their fleet
√
Increase Motor Pool6. Identify city facilities for expansion of motor pool √
21
Government Performance and Financial Management
Technology & Data QualityConsultant Recommendation Completed In-Progress Next Steps
Maximize Use of the Fleet Management System (M5)1. Enforce requirement to track all vehicles and equipment in
M5 √
2. Evaluate implementation of M5 system modules currently not in use
√
3. Integrate with Risk Management System (Origami) on accident data
√
4. Offer refresher and on-going M5 training tailored to individual roles
√
Assign staff support to monitor data quality 5. Hire/Train incumbent to fill role of Data Quality Senior
Analyst√
Simplify and automate billing
6. Identify top disparities in lease rates and actual work order totals for transparency and customer service
√
• The December 12, 2018 City Council Agenda includes 1st phase of FY18-19 fleet purchase
• Working with DPD, CIS and City Attorney on changes to tow response for City Fleet
• City to operate as Vehicle Registration agent for Dallas County
• Working with Cedar Valley College on MOU to secure necessary training 22
Government Performance and Financial Management
Upcoming Agenda Items
Next StepsShort Term
• Continue discussions with departments about potential underutilized vehicles and right-sizing their assigned fleet
• Expand the motor pool system to increase vehicle utilization thru sharing
Long Term• Review funding strategy to address replacement
eligible vehicles during future budget cycles
23Government Performance and Financial Management
23
Fleet Services Update(Dallas Fleet Management Efficiency Study)
City Council BriefingDecember 5, 2018
Donzell Gipson, Interim DirectorEquipment and Fleet ManagementCity of Dallas
Eric Kuhns, Assistant DirectorEquipment and Fleet ManagementCity of Dallas